AMD claims: “Fusion-based processors will be designed to provide step-function increases in performance-per-watt-per-dollar over today’s CPU-only architectures, and provide the best customer experience in a world increasingly reliant upon 3D graphics, digital media and high performance computing.”

The GPU and CPU appear to be separate cores on a single die according to early diagrams of AMD’s Fusion architecture. CPU functionality will have access to its own cache while GPU functionality will have access to its own buffers. Joining together the CPU and GPU is a crossbar and integrated memory controller. Everything is connected via HyperTransport links. From there the Fusion processor will have direct access to system memory that appears to be shared between the CPU and GPU. It doesn’t appear the graphics functionality will have its own frame buffer.

While Fusion is a hybrid CPU and GPU architecture, AMD will continue to produce discrete graphics solutions. AMD still believes there’s a need for discrete graphics cards for high end users and physics processing.

i only skimmed the article (so RTFA me if im off here) but if its really both GPU and CPU on the same chip then i dont like it one bit... i upgrade my GPU at least twice for each CPU i've owned... i dont like having them tied together physically... they should find a way to have them both plug into the MB and be tightly integrated but not be on the same chip...

It is only integrated video on the CPU die, discrete is still supported and recommended. This basically moves an integrated GPU from the chipset to the CPU. It should lead to greaer performance for integrated video, but again discrete video is still supported.